A Beautiful place is the factory, which is defined as beautiful because it can generate and inspire beauty.
The relationship between these two realities is deep, indeed “even intrinsic”, as the philosopher and theologian Vito Mancuso argues in his essay, which opens the Pirelli Annual Report 2021, because “manufacturing and beauty, or the economy and aesthetics, are related through a fundamental element for both of them: materials”. And the transformation of material generates products and works of art, productivity and splendour, thanks to the hands of man, because the factory and art are primarily about “manufacturing”.
In the speech in praise of beauty given by a strange character by the name of Stepan Trofimovich, Dostoevsky proposes a choice between “Shakespeare or a pair of boots, Raphael or oil”. The first names represent beauty, the second manufacturing, and from our own perspective too you can understand that between the two realities the connection is in no way immediately apparent.
When we were children, my sister and I played a game we called factory. It involved disassembling then attempting to reassemble our toys, kneeling side by side at the bench by the front door, where our father sat to put on his work shoes. If he couldn’t find a shoehorn, he’d use a spoon.
The strength of the group’s performance in 2021, when, along with the rest of the global economy, Pirelli began to emerge from the stresses and challenges of the most intense phase of the Covid 19 emergency and relative containment measures, was a validation not only of the Company’s defensive measures but also of the underlying business model. Beating expectations in such a challenging context, as Pirelli did, is a testament to the group’s underlying strength.
As the automotive sector relaunched activities, like other manufacturers, it faced supply chain constraints as the companies it relies on restarted operations and gradually ramped up production. The sector was particularly affected by the shortage of semi-conductors; however, Pirelli’s strategic focus on high-end vehicles proved its resilience as carmakers privileged the production of their more valuable models. This was reflected in the market dynamics from 2019 to 2021 when, as overall car production decreased, the Prestige segment grew and the Premium segment returned to almost pre-pandemic levels.
While developing its market position, Pirelli also increased its efforts in sustainability that remains a core value and a pillar of the growth model. In 2021, this environmental responsibility was recognized through numerous international awards and achievements. These included Pirelli being the only tyre maker at the global level to receive three stars in the Environmental Accreditation Programme of the Federazione Internazionale dell’Automobile - for fully integrating its sustainability strategy in motorsport - and the world’s first to produce a tyre with natural rubber certified by the Forest Stewardship Council. The company was also confirmed in the Automobiles & Components sector of the Dow Jones World and Europe Sustainability Indices, earned a position on the CDP “Climate A list” for its contribution to the fight against climate change, and launched a multi-year project in partnership with the NGO BirdLife International to favour the production of sustainable natural rubber in Indonesia.
Even as 2021 saw a return to some level of normality, in contrast to the extraordinary events of 2020, the health emergency was not over. The company continued with its programs to protect employees and ensure workplace safety while contributing to prevention measures for the wider community, with actions such as loaning structures to serve as public vaccination hubs.
In 2021, Pirelli’s people were again the foundation of the group’s achievements, as they have been throughout the company’s 150-year history. Even with the challenges of the period, Pirelli’s employees and management were nonetheless able to apply their talent, dedication and effectiveness to the full; and the group demonstrated that it is on a winning path.
Thank you to everyone at Pirelli and to our Stakeholders for their support.
We began 2022 reaching an important milestone: 150 years of company life. A long journey made of industry, culture, tradition, technology and passion that motivate the 30,000 people who each day help build Pirelli’s present and future. We have traversed three centuries of history and marked the occasion, on 28 January 2022, despite the difficulties of the external context linked to the pandemic.
The measures adopted allowed us to overcome the obstacles on our path and end 2021 with results beyond our forecasts, which had been revised upwards throughout the year. Revenues exceeded 5.3 billion euro, while adjusted Ebit was above 800 million euro, with a margin of 15.3%, net profit over 320 million euro and cash generation before dividends 431 million euro. We were able to achieve these results by increasing our focus on the high end and specialties, cutting-edge products and efficiency programs.
Our ability to adapt the business model to the constant and rapid changes of the economic context, already demonstrated during the health emergency, will also be essential in handling the rising volatility stemming from growing geopolitical tensions.
Our commitment to Research & Development remains a key factor, where the company invests 6% of High Value revenues annually, one of the highest levels in the sector. There is also the significant commitment to sustainability that is central to our strategy and led to our launching the first FSC certified tyre in the world. In line with the goal of attaining carbon neutrality by 2030, in 2021 Pirelli pursued the decarbonization of the group’s value chain. The Company achieved the “Science Based Target” for climate control at its locations four years ahead of schedule, which will lead to a more ambitious update of the target.
The Pirelli brand was once again an important lever whose power we constantly fed through our sports’ sponsorships, as well as the many cultural projects and initiatives we supported. In terms of our identity, the work of the Fondazione Pirelli, which houses our archives and history, was also fundamental, as was Pirelli HangarBicocca, our art space that helps observe and understand contemporary culture.
Thanks to all this, Pirelli is synonymous with safety, technology and reliability, together with competition, aesthetics and entrepreneurial culture. Today we are involved in more than 350 motorsport competitions, headed by Formula 1, Superbike and the Rally world championship. Our brand is also connected with the worlds of winter sports, football and sailing, where Pirelli flanks Luna Rossa. After the suspension of the 2021 edition because of the pandemic, we returned to publishing the Pirelli Calendar, with the 2022 edition “On the road” signed by Bryan Adams.
Thank you to all the people who enabled Pirelli to celebrate 150 years while keeping its gaze constantly on the future. I wish us all, amid the international difficulties of the moment, a return to a serene future.